Weekly Technical Market Insight: 18th – 22nd January 2021

Weekly Technical Market Insight: 18th – 22nd January 2021, FP Markets

Note – Charts provided by Trading View

US Dollar Index:

Higher by nearly 0.8 percent last week (1% month-to-date off fresh 33-month lows at 89.20), the US dollar index (DXY) is now on the doorstep of 91.00 psychological resistance. Increased enthusiasm to the upside over the coming weeks brings to light additional daily resistance at 92.26, accompanied by a daily declining wedge (between 94.30/92.18) take-profit objective at 92.76 (vertical green boxes).

Additional observations on the daily chart reveal the RSI indicator bumped heads with its declining wedge target (black arrows) at around 53.26 on Friday. This followed a break of RSI trendline resistance.

In spite of January’s pullback, the market’s overall trend remains bearish on the monthly chart—entrenched within a bulky pullback since May of 2008 (major swings). Since 2016, however, resistance developed around 103.00, launching a series of lower lows and highs in 2020 on the daily timeframe. Should price submerge the 88.25 February 16 low (2018), this may help further validate the current bearish narrative.

Weekly Technical Market Insight: 18th – 22nd January 2021, FP Markets

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply at 1.1857/1.1352 in August, buyers made an entrance heading into the close of 2020 and recorded fresh multi-month highs.

This—despite January’s current slide off 2021 pinnacles (1.2 percent)—reasons additional upside towards ascending resistance (prior support – 1.1641) may eventually be on the horizon.

The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

Support at 1.2095, as you can see, succumbed to downside pressure in the latter half of last week. This is likely to heighten interest in demand from 1.1923/1.2001 this week—a significant zone given it was here a decision was made to reach fresh peaks and topple 1.2011 (September 1 high). Traders will also note the demand is complemented by trendline support (1.0774).

Through the lens of the RSI indicator, Friday swept aside trendline support and voyaged through the 50.00 centreline.

H4 timeframe:

Support at 1.2164—a level with history dating as far back as January 2018—came under fire in the second half of last week. By way of seven successive mostly bearish candles, Friday settled within a stone’s throw from demand at 1.2040/1.2065, accompanied by a Fib cluster at 1.2063/1.2071 (38.2% Fib level/1.272% Fib projection).

H1 timeframe:

Subsequent to the 1.21 retest in the early hours of US trading Friday, sellers finished the week challenging support between 1.2050 and 1.2079 (composed of 1.2050 support, 1.2058 support [December 9 low], 100% Fib ext. and a 127.2% Fib projection). On top of this, the aforesaid support is associated with an RSI oversold signal.

So, while the immediate trend favours further weakness, efforts to pull higher might be seen in early trading this week.

Observed levels:

Long term:

The monthly timeframe remains calling for higher levels. However, in light of January’s slide so far, retesting demand at 1.1857/1.1352 is possible.

Daily demand at 1.1923/1.2001 could hold back selling this week, taking into account the area fuses with trendline support.

Short term:

H1 support between 1.2050 and 1.2079, in association with H4 demand at 1.2040/1.2065 (and Fib cluster support), delivers a floor to work with early this week.

Short-term buying seen from the aforesaid supports implies the pair may seek to reclaim 1.21. Additional selling, moves that puncture H4 demand, on the other hand, could see price work its way into daily demand.

Weekly Technical Market Insight: 18th – 22nd January 2021, FP Markets

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following two spirited months of gains off demand at 0.7029/0.6664 (prior supply), buyers, despite January trading off best levels, appear free to explore as far north as 0.8303/0.8082—a supply zone aligning closely with trendline resistance (prior support – 0.4776).

In terms of trend, the primary downtrend (since mid-2011) remains south until breaking 0.8135 (January high [2018]).

Daily timeframe:

Since January 6 refreshed 2021 tops at 0.7820, AUD/USD has consolidated gains.

In terms of technical levels to be mindful of this week, support at 0.7647 remains a prominent fixture, along with supply at 0.7937/0.7890.

The RSI support at 60.00 collapsed on Friday, shedding light on support from 52.00.

H4 timeframe:

Resistance at 0.7805, as you can see, proved its effectiveness once more heading into the closing stages of last week.

The pair withdrew to trendline support (0.6991), with buyers displaying a non-committal tone. This casts light on demand at 0.7665/0.7644, a previous supply area drawn from June 2018. You may also recognise this zone shares space with daily support noted at 0.7647.

H1 timeframe:

Early US Friday witnessed price dip a toe in waters beneath the 0.77 level, establishing a hammer candle and likely filling stops. The uninspiring effort to hold 0.77 hints at a test of demand from 0.7654/0.7672 this week.

0.7654/0.7672 is interesting in terms of technical confluence—fastened to the upper side of H4 demand at 0.7665/0.7644 and located just above daily support from 0.7647.

RSI fans will also note the indicator greeted oversold territory after dethroning trendline support.

Observed levels:

Long term:

Monthly price is set to reach supply at 0.8303/0.8082 and corresponding trendline resistance. Yet, before buyers make an entrance, daily price exhibits scope to retest support at 0.7647, with supply at 0.7937/0.7890 targeted.

Short term:

H4 demand at 0.7665/0.7644 and associated H1 demand at 0.7654/0.7672, together with daily support at 0.7647, is a region dip-buyers may hone in on this week.

Weekly Technical Market Insight: 18th – 22nd January 2021, FP Markets

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Over the span of four years, USD/JPY carved out a descending triangle pattern between 118.66/104.62.

Although December pursued terrain south of 104.62, January has so far arranged a modest comeback and is within close range of retesting 104.62.

104.62 ceding ground, however, throws light on support from 101.70, with a break uncovering trendline support (76.15) and the descending triangle’s take-profit level at 91.04 (red).

Daily timeframe:

Brought forward from previous analysis –

Buyers and sellers squared off ahead of trendline resistance (111.71) last week, following the 103.08 support rebound seen the week prior.

Beyond the aforesaid areas, demand is visible at 100.68/101.85 (encases monthly support at 101.70), together with supply at 106.33/105.78 and the 200-day simple moving average.

Also prominent is the RSI indicator recently crossing paths with resistance at 57.00, a level hindering upside since July 2020.

H4 timeframe:

104.16 resistance and demand at 103.46/103.58 (prior supply) were centre stage last week.

Downriver, demand is set around 102.95/102.82, arranged beneath daily support at 103.08, while skies above 104.16 are relatively blue until resistance at 104.76—placed north of 104.57 (December 10 high).

H1 timeframe:

USD/JPY eked out modest gains Friday, in what was a somewhat rudderless session.

The 100-period simple moving average, nonetheless, made an entrance around 103.91. 104 resistance, in addition to supply at 104.03/104.10 (prior demand), is positioned in close view.

However, sellers assuming control this week could have price join hands with 103.50 support, with a break unmasking a Fibonacci cluster between 103.24 and 103.32 (blue).

Besides support at 46.85, the RSI indicator offers little at the moment.

Observed levels:

Long term:

The monthly timeframe shows 104.62 is likely to still be retested (unites closely with daily trendline resistance) before reaching for 101.70 support.

103.08 daily support is also a level to remain aware of.

Short term:

H4 areas to be watchful of this week are 104.16 resistance and demand at 103.46/103.58.

The H1 shows Fibonacci support at 103.24/103.32 may garner attention, as might the 104 space owing to the local confluence it brings to the table.

Weekly Technical Market Insight: 18th – 22nd January 2021, FP Markets

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

December’s 2.5 percent extension elevated GBP/USD to multi-month highs and stirred trendline resistance (2.1161).

January, off fresh highs, is currently south by 0.6 percent.

In terms of trend, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way – April high, 2018. In effect, the aforesaid high represents the next upside objective on the monthly chart.

Daily timeframe:

Despite renewing 2021 highs at 1.3711 Thursday, ahead of resistance at 1.3755, GBP/USD fell sharply on Friday and settled at session lows.

The pair has favoured an upside bias since early 2020, therefore last Monday’s swing low at 1.3450 could be challenged this week, though follow-through action is possibly bound for support at 1.3176.

The RSI indicator has revealed a rangebound environment since November, limited by support around 47.00 and resistance at the 66.00 region.

H4 timeframe:

Resistance at 1.3711—and associated Fib ext. levels—proved its worth once more on Friday; sellers nosedived from the said area and invaded demand at 1.3576/1.3607.

Giving up at 1.3576/1.3607 throws light on additional demand at 1.3401/1.3446 (and associated Fibs).

H1 timeframe:

Alongside H4 demand at 1.3576/1.3607, the 100-period simple moving average and 1.36 level also caved on Friday, with the latter serving as resistance as we spun into US trading.

The expectation, therefore, is for a possible dip into 1.3550 support on the H1 chart, with a break taking aim at 1.35.

Out of the RSI indicator, Friday ended in the shape of bullish hidden divergence—price formed a higher high while the indicator chalked up a lower low—from oversold space.

Observed levels:

Long term:

Despite scope to travel north on the monthly timeframe, a retest at the recently breached trendline resistance could be ahead. Interestingly, daily support at 1.3176 is arranged just south of the monthly trendline.

Short term:

Buyers failing to accept H4 demand at 1.3576/1.3607 highlights the possibility of a return to H4 demand at 1.3401/1.3446 this week.

A similar picture is seen on the H1 chart, particularly after retesting the lower side of 1.36, with 1.3550 likely to be initially targeted.

Weekly Technical Market Insight: 18th – 22nd January 2021, FP Markets

 

DISCLAIMER: The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

  • Weekly Technical Market Insight: 18th – 22nd January 2021, FP Markets
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